Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.
In this report, we are going to highlight some interesting insider transactions at EOG Resources Inc (EOG:US). EOG is one of the largest crude oil and natural gas exploration and production companies in the US. The company, which uses advanced technology such as 3D seismic technology to develop petro-physical models, has proven reserves in the US, Trinidad, and China. It is listed on the New York Stock Exchange and currently has a market capitalization of approximately $77.82 billion.
Insider Buying at EOG Resources
2iQ data shows that on January 12, board member Michael Kerr participated in legal insider trading and purchased 20,000 EOG shares at a price of $130.49 per share. This trade cost the insider approximately $2.6 million and increased his holding to 170,000 shares.
Oil and Gas Analyst
This trade is worth highlighting for a couple of reasons.
Firstly, Mr. Kerr has a background in investment management. Previously, he spent 25 years at Capital Group where he managed multiple funds as an equity portfolio manager, and covered global oil and gas companies as an equity investment analyst. So, he’s likely to have a very good understanding of the company’s intrinsic value.
Secondly, Mr. Kerr has made well-timed purchases here before. Back in November 2021, the insider picked up 50,000 EOG shares at a price of $86.00 per share. Since then, the stock has risen as high as $149.
10% Dividend Increase
EOG’s Q3 2022 results showed that the company has a lot of momentum right now.
For the quarter, adjusted net income amounted to $2.2 billion, up from $1.3 billion a year earlier. Meanwhile, free cash flow totaled $2.3 billion versus $1.4 billion a year earlier. The company ended the quarter with no net debt compared to net debt of $824 million at the end of Q3 2021.
On the back of this strong Q3 performance, EOG raised its dividend by 10%. It also declared a special dividend of $1.50 per share.
“EOG continues to get better. The decision to increase the regular dividend by 10 percent reflects our confidence in EOG’s future. EOG is well positioned to improve returns going forward from an existing asset base of low-cost-of-supply wells, augmented by a growing roster of new emerging plays,” said CEO and Chairman Ezra Yacob.
In light of the substantial dividend increase, and the fact that the stock still has a low valuation, we see the insider buying here as a bullish indicator.
